New Stock Preview | Significant improvement in performance after turning losses, Hicoup Technology abandons listing in A-share market and welcomes new growth opportunities in Hong Kong?

Recently, Anhui Xici Technology Co., Ltd. (referred to as Xici Technology) submitted an application for listing to the main board of the Hong Kong Stock Exchange, with China Securities Co., Ltd. International and GF SEC (Hong Kong) as joint sponsors. Prior to this, Xici Technology had completed multiple rounds of financing, with shareholders including Advanced Manufacturing Industry Investment Fund II (Limited Partnership), Cyberle Capital, Beijing Oriental Huijia, Cornerstone Asset Management, Estun Automation, etc. In December 2022, the company completed its E+ round of financing, with a post-investment valuation of approximately 3.172 billion yuan. Public information shows that in April of last year, the company had initiated A-share listing guidance, but terminated the agreement in July of this year, possibly due to uncertainties in the A-share listing timetable. Currently, driven by strong demand in high-growth downstream industries such as new energy vehicles, industrial automation, and healthcare, the global magnetic sensor market continues to expand, with competition becoming increasingly fierce. As one of the few IDM companies in the global magnetic sensor field with vertical integration capabilities, Xici Technology has established a leading market position in China and globally, and its latest performance has turned losses into profits, with net profits turning positive, indicating gradual improvement in operational conditions. The company's upcoming IPO in Hong Kong will also receive close market attention. Net profit turning positive before listing Public information shows that Xici Technology is a leading IDM company in the global magnetic sensor industry, one of the few companies in the world with a complete range of magnetic sensing technologies and comprehensive vertical integration across the entire industry value chain, able to provide one-stop magnetic sensor solutions to leading customers in various industries globally. In terms of performance, the company's operating income has fluctuated slightly in recent years, but has maintained an overall growth trend, and achieved a turnaround in 2024. Specifically, in the period from 2022 to 2024, Xici Technology achieved revenues of approximately 666 million yuan, 594 million yuan, and 703 million yuan respectively; with net profits for the same period being -1.206 billion yuan, -66.562 million yuan, and 9.852 million yuan respectively. In the first four months of 2025, the company achieved revenues of 265 million yuan and net profits of 10.036 million yuan, already surpassing the full-year net profit level of 2024. The company stated that its net profit significantly declined in 2022 mainly due to the decrease in the fair value of redeemable liabilities by 11.95 billion yuan; the decline in revenue in 2023 was mainly due to a slowdown in demand from certain downstream industries (especially the photovoltaic industry); while the revenue recovery in 2024 and the period from January to April 2025 was mainly driven by the growth in demand from green energy, new energy vehicles, and automotive industry customers. It is understood that Xici Technology's core products include AMR (anisotropic magnetoresistance), GMR (giant magnetoresistance) and TMR (tunnel magnetoresistance) wafers, magnetic angle encoders, magnetic displacement sensors, current sensor chips & modules, magnetic detection systems, etc. The company's IDM model can flexibly adjust the design and process parameters of the entire process from material innovation to chip and module manufacturing, thereby efficiently meeting the solution requirements of innovative high-end applications and achieving quick and flexible customized responses. In terms of historical revenue, Anhui Xici's revenue mainly comes from current sensors, with downstream applications of this product mainly focused on scenarios such as photovoltaic inverters and new energy vehicles. From 2022 to 2024, revenue from current sensors accounted for 80.8%, 78.1%, and 82.7% of total revenue in each period. In terms of customer concentration, from 2022 to the first four months of 2025, revenue from the largest customer accounted for 31.3%, 24.6%, 20.9%, and 17.8% respectively, while the top five customers collectively accounted for 65.2%, 62.4%, 62.5%, and 58%, showing a gradual decrease in reliance on major customers. Currently, the company's revenue is still mainly from the Chinese market. From 2022 to the first four months of 2025, the proportion of sales revenue from China ranged from 83.2% to 81.4%, 84.7%, and 83.3%. However, Xici Technology is actively promoting globalization: it has a sensor wafer design and manufacturing center and an encoder design and manufacturing center in its German subsidiary Sensitec GmbH, and a sensor wafer design and development center in Portugal; domestically, it has a sensor manufacturing center in Bengbu, a sensor research and development center in Wuxi, and a sensor engineering and manufacturing center in Ningbo. In addition, in 2023, a company specializing in encoder research and development and production named ESSTMAGS was established in Wuxi. Previously, the company strategically acquired Sensitec in 2021, a leading European magnetic sensor company with over 20 years of experience in magnetic sensor research and industrialization, significantly strengthening its European business layout and introducing high-precision and high-reliability magnetoresistive sensor components with market-proven track records. Sensitec has supplied magnetic sensors jointly developed with NASA's "Curiosity" Mars rover, as well as participated in Europe's first Mercury exploration mission, demonstrating outstanding technical capabilities and project experience. Leveraging Sensitec's international reputation, Xici Technology will be able to accelerate its expansion in the domestic high-end market and break through the international market with mature European market networks and comprehensive supplier qualifications while overcoming local certification barriers, significantly reducing market entry costs and time. In terms of research and development, from 2022 to the first four months of 2025, the company's research and development expenses were 42.7 million yuan, 50.9 million yuan, 53.7 million yuan, 17.4 million yuan, and 16.2 million yuan respectively. As of April 30, 2025, the company had 118 research and development professionals, with core team members mostly senior experts with international backgrounds and over 20 years of magnetic sensing research and development experience in areas such as TMR design, magnetic circuit design, circuit design, structural design, and system applications. Leading the national market in segmented fields Benefiting from steady developments in downstream industries such as automotive, new energy, industrial automation, and consumer electronics sectors, demand in the magnetic sensor market continues to rise. In terms of revenue, the global market for magnetic sensors in the magnetic sensor industry increased from 74.1 billion yuan in 2020 to 119.2 billion yuan in 2024, with a compound annual growth rate of 12.6%. In 2024, the market sizes of Hall sensors and xMR sensors reached 83.7 billion yuan and 35.5 billion yuan respectively, with compound annual growth rates between 2020 and 2024 of 11.6% and 15.3% respectively. Looking ahead, the global market size of magnetic sensors is expected to reach 293 billion yuan by 2029, with a compound annual growth rate of 19.7% from 2024 to 2029. During this period, the market sizes of Hall sensors and xMR sensors are expected to increase to 194 billion yuan and 99 billion yuan respectively by 2029, with compound annual growth rates of 18.3% and 22.8% respectively. According to Frost & Sullivan data, based on 2024 revenue, Xici Technology ranks sixth among global magnetic sensor IDM manufacturers and is the leading Chinese magnetic sensor company. Additionally, Xici Technology is one of the top five companies in the world with vertical integration manufacturing capabilities in the xMR magnetic sensor industry. However, the magnetic sensor market exhibits a highly fragmented nature, with over 200 magnetic sensor suppliers globally as of December 31, 2024, and fierce competition in the mid to low-end markets. Based on 2024 magnetic sensor revenue, Anhui Xici Technology's market share is less than 0.6%. In recent years, Xici Technology has provided products and services to top customers in various downstream industries. In the fields of new energy vehicles and automotive electronics, it has become an important supplier to some global leading new energy vehicle companies, traditional automotive manufacturers, and battery companies; its high-precision Siasun Robot&Automation magnetic encoders have established large-scale cooperation with globally renowned Siasun Robot&Automation manufacturers such as Dobot; in the life sciences sector, the company's magnetic encoders are used as exclusive solutions in a leading medical microelectronics company's pacemaker system, providing key motion control and position sensing functions to meet high precision and reliability requirements. From a financial perspective, Xici Technology's products are mainly used in the fields of green energy (photovoltaic, energy storage, wind power, etc.), new energy vehicles, automotive, industrial automation, and Siasun Robot&Automation. In 2024, revenue from these areas accounted for 61.3%, 21.0%, 12.7%, and 5.1% respectively, with the CHINA GREEN energy and new energy vehicles contributing over 80% of the revenue. Looking at the future performance of the company based on downstream industry trends, in the second quarter of this year, the photovoltaic industry is still at a cyclical low, with pressure on major industry chain companies. However, with the active guidance of industry "anti-crowding" policies at the national level, prices along the photovoltaic industry chain are gradually warming up. Since the end of June, a series of related meetings have been held with increasing specification; on August 19, the Ministry of Industry and Information Technology and six other departments jointly held a symposium on the photovoltaic industry to deploy further measures to regulate the competition order in the photovoltaic industry, strengthening the determination to counter internal competition, and substantive changes in supply and demand sides are worth expecting. As of August 27, the prices of polycrystalline N-type dense material/particle silicon were 44.5/47 thousand yuan/ton, N-182/N-210/N-210R silicon prices were 1.25/1.60/1.40 yuan/piece, TOPCon-182/210/210R battery prices were 0.295/0.290/0.285 yuan/W, and double-sided TOPCon module prices were 0.685 yuan/W. With the joint promotion of policy guidance and industry self-regulation, terminal module prices are stabilizing and rebounding, upstream and downstream price transmission mechanisms are unobstructed, and profit margins in various sectors of the industry chain are expected to gradually recover. In the field of new energy vehicles, driven by policies such as "scrappage for new", the domestic market has significantly warmed up, providing strong support for automotive consumption. According to data from the China Association of Automobile Manufacturers, new energy vehicles continued to grow rapidly in the first half of the year, with 6.968 million vehicles produced and 6.937 million vehicles sold by Shanxi Guoxin Energy Corporation in the first six months of 2025, representing year-on-year growth of 41.4% and 40.3% respectively; sales of new energy vehicles reached 44.3% of total vehicle sales; and exports of new energy vehicles reached 1.06 million vehicles, up 75.2% year-on-year. Looking to the second half of the year, experts believe that the "both new" policies will continue to be implemented in an orderly manner, combined with continued enriching of new product supply by companies, which will help drive sustained growth in automotive consumption, and the automotive industry will maintain a healthy and stable operation. Looking ahead, as the photovoltaic industry gradually emerges from its bottom under the push of policy guidance and price stabilization, and with the continued expansion of the new energy vehicle market, Xici Technology is expected to significantly benefit from the resurgence of demand in these two major downstream markets. If the company's IPO is successful, it will provide important support for its global strategic layout and technological upgrade, and further consolidate its competitive advantage.